In highly contestable markets, increases in concentration will enhance market power.

Name: In highly contestable markets, increases in concentration will enhance market power.
Brand: Quizplus
Rating: 4.7 (39 reviews)

Question

Quizplus · Accepted Answer

In highly contestable markets, the threat of new entrants or substitutes provides a check on market power. As a result, an increase in concentration is likely to attract new entrants, which may erode the market power of the incumbent firms. Hence, the statement is false.

In Highly Contestable Markets, Increases in Concentration Will Enhance Market